Most lawyers file preverdict interest under “things the court administrator computes at the end.” It gets a line in the judgment, somebody checks the arithmetic, and nobody thinks about it again.
That’s a mistake, and Minn. Stat. § 549.09, subd. 1(b) is written to make it an expensive one. The statute doesn’t just add interest to a judgment. It compares the two sides’ written settlement offers and gives the interest to whichever side guessed closer to the verdict. So a written offer isn’t a negotiating gesture. It’s a priced option on a pile of money, and not making one is a decision with a number attached. I price that option in every civil case I evaluate. Here’s the math: what the statute says, the four decision points it creates, the rate cliff at $50,000 that almost nobody plans around, and the one sentence in the middle of subdivision 1(b) that can wreck an otherwise winning interest position.
How does preverdict interest start running in Minnesota?
Earlier than most people think. Here’s how subdivision 1(b) opens:
(b) Except as otherwise provided by contract or allowed by law, preverdict, preaward, or prereport interest on pecuniary damages shall be computed as provided in paragraph (c) from the time of the commencement of the action or a demand for arbitration, or the time of a written notice of claim, whichever occurs first, except as provided herein. The action must be commenced within two years of a written notice of claim for interest to begin to accrue from the time of the notice of claim.
“Whichever occurs first” is the whole point of that sentence, and “a written notice of claim” is the earliest of the three. A demand letter sent long before suit can move the start date back, subject to one condition in the very next sentence: the action must be commenced within two years of that written notice for interest to run from the notice date.
So there’s a two-year window. Send a written notice of claim, sue within two years, and interest runs from the letter. Send the letter and wait twenty-five months, and the letter buys you nothing. It’s one of a family of Minnesota deadlines that run from a fact, not a docket entry. I walk through how that family works in The Minnesota Deadlines That Ruin Cases Are the Ones With No Date on Them.
This isn’t small money. On a judgment over $50,000, the statutory rate is ten percent per year (more on that below). Two years of accrual on a $400,000 judgment, at ten percent, is a number worth writing one letter for.
The offer comparison: who actually gets the interest?
Here’s the machinery, quoted in full because every clause of it matters:
If either party serves a written offer of settlement, the other party may serve a written acceptance or a written counteroffer within 30 days. After that time, interest on the judgment or award shall be calculated by the judge or arbitrator in the following manner. The prevailing party shall receive interest on any judgment or award from the time of commencement of the action or a demand for arbitration, or the time of a written notice of claim, or as to special damages from the time when special damages were incurred, if later, until the time of verdict, award, or report only if the amount of its offer is closer to the judgment or award than the amount of the opposing party’s offer. If the amount of the losing party’s offer was closer to the judgment or award than the prevailing party’s offer, the prevailing party shall receive interest only on the amount of the settlement offer or the judgment or award, whichever is less, and only from the time of commencement of the action or a demand for arbitration, or the time of a written notice of claim, or as to special damages from when the special damages were incurred, if later, until the time the settlement offer was made. Subsequent offers and counteroffers supersede the legal effect of earlier offers and counteroffers.
Minn. Stat. § 549.09, subd. 1(b).
Boil it down to the two outcomes the statute actually describes.
| Prevailing party’s offer is closer to the verdict | Losing party’s offer is closer to the verdict | |
|---|---|---|
| What the interest is calculated on | “any judgment or award” | “only . . . the amount of the settlement offer or the judgment or award, whichever is less” |
| When it stops running | “until the time of verdict, award, or report” | “until the time the settlement offer was made” |
Read the right-hand column again. That’s the one that costs money. A losing party whose offer lands closer to the verdict does two things at once: it caps the base interest is computed on at the lesser of the offer or the judgment, and it stops the clock as of the date the offer was made. Everything after that date is free.
That’s what I mean by an option with a price. A defendant who serves a credible written offer early in a case has bought, for the cost of drafting a letter, the chance to wipe out every dollar of interest that would otherwise pile up over the next two or three years of litigation. A defendant who serves nothing has passed on buying it.
The 30-day sentence is quietly pulling weight, too. “If either party serves a written offer of settlement, the other party may serve a written acceptance or a written counteroffer within 30 days. After that time, interest . . . shall be calculated by the judge or arbitrator in the following manner.” A party who gets a written offer and lets thirty days go by without a written counteroffer has left the other side’s number as the only one on its side of the ledger.
The sentence that ruins good interest positions
Subsequent offers and counteroffers supersede the legal effect of earlier offers and counteroffers.
Fifteen words, and they turn ordinary settlement instinct upside down.
The comparison the statute runs isn’t “the best offer either side ever made.” It’s the last one. Every new number wipes out the legal effect of the number before it.
Think about what that does to the most common negotiating pattern in civil litigation. A plaintiff demands high early, learns more about the case, and comes down as trial gets close and the cost of trying it gets real. That’s normal, sensible advocacy. Under this statute, it’s also swapping an offer that might have been closer to the eventual verdict for one that’s farther from it.
If the jury comes back high, the plaintiff’s superseded early demand is worth nothing. The number in the comparison is the last one served.
Flip it for defendants. A defendant who serves a realistic offer early and then, sensing weakness, lowers it before trial has superseded its own best-positioned number.
The practical rule I take from the text: your interest position is set by your last written offer, so decide what you want that number to be before you serve it. That’s not an argument for refusing to move. It’s an argument for knowing, the moment you move, what you’re giving up in the other column.
What preverdict interest is not available on
Subdivision 1(b) closes with five exclusions:
(1) judgments, awards, or benefits in workers’ compensation cases, but not including third-party actions;
(2) judgments or awards for future damages;
(3) punitive damages, fines, or other damages that are noncompensatory in nature;
(4) judgments or awards not in excess of the amount specified in section 491A.01; and
(5) that portion of any verdict, award, or report which is founded upon interest, or costs, disbursements, attorney fees, or other similar items added by the court or arbitrator.
Four notes on that list.
Clause (2), future damages, is the biggest carve-out in most serious injury cases. And the statute tells you how the offer gets split for that purpose: “For the purposes of clause (2), the amount of settlement offer must be allocated between past and future damages in the same proportion as determined by the trier of fact.” Your offer doesn’t get to be all past damages. It’s split by the jury’s own proportion.
Clause (3) means punitive damages earn nothing while the case sits. In Minnesota, you can’t plead punitive damages in the complaint at all. They take a motion, affidavits, and a prima facie showing before they come into the case. See In Minnesota You Are Not Allowed to Plead Punitive Damages. Put the two statutes together and a punitive claim shows up late and earns no interest once it does. Compensatory damages work the opposite way. Delay doesn’t treat them the same.
Clause (4) points at conciliation court. Section 549.09 cross-references “the amount specified in section 491A.01” without saying which amount, and § 491A.01, subd. 3a(a) specifies two: conciliation court has jurisdiction where the amount “does not exceed: (1) $20,000; or (2) $4,000, if the claim involves a consumer credit transaction.” In a small case, read that cross-reference carefully. Conciliation court’s own mechanics, including the removal window that decides most of these cases, are covered in Minnesota’s Conciliation Court Handles Claims Up to $20,000.
Clause (5) blocks interest on interest and interest on fees. If attorney fees are the main recovery in your case, know that the fee award itself is outside preverdict interest.
The rate: a cliff at $50,000
Here’s where the statute stops being a technicality and starts driving strategy. Paragraph (c) sets two different rates, and the gap between them is big.
At or below $50,000, and for or against government regardless of amount:
(c)(1)(i) For a judgment or award of $50,000 or less or a judgment or award for or against the state or a political subdivision of the state, regardless of the amount, or a judgment or award in a family court action, except for a child support judgment, regardless of the amount, the interest shall be computed as simple interest per annum. The rate of interest shall be based on the secondary market yield of one year United States Treasury bills, calculated on a bank discount basis as provided in this section.
On or before the 20th day of December of each year the state court administrator shall determine the rate from the one-year constant maturity treasury yield for the most recent calendar month, reported on a monthly basis in the latest statistical release of the board of governors of the Federal Reserve System. This yield, rounded to the nearest one percent, or four percent, whichever is greater, shall be the annual interest rate during the succeeding calendar year.
So the low-end rate floats with Treasury yields, gets rounded to the nearest whole percent, and can’t go below four percent. The State Court Administrator sets it on or before December 20 for the following calendar year and publishes it. Check the published figure for the year you need. Don’t assume one.
Above $50,000, one sentence, no floating, no rounding:
(2) For a judgment or award over $50,000, other than a judgment or award for or against the state or a political subdivision of the state or a judgment or award in a family court action, the interest rate shall be ten percent per year until paid.
Ten percent per year until paid. With the Treasury-based rate having spent long stretches at its four percent floor, that’s no rounding difference. It can be more than double, and it applies to a judgment of $50,000.01 but not to a judgment of $50,000.00.
That has two consequences.
The $50,000 line is a real planning threshold, and it sits at the same number as the pleading threshold in Minn. Stat. § 544.36 and Minn. R. Civ. P. 8.01. Minnesota uses $50,000 as its dividing line between a small civil case and a serious one in more than one place.
And suing a city, a county, a school district, or the state changes the rate no matter how big the case is. Paragraph (c)(1)(i) applies “for or against the state or a political subdivision of the state, regardless of the amount,” and subdivision 1(e) defines both terms: “state” to include “a department, board, agency, commission, court, or other entity in the executive, legislative, or judicial branch of the state,” and “political subdivision” to include “a town, statutory or home rule charter city, county, school district, or any other political subdivision of the state.” A $2 million verdict against a county doesn’t carry the ten percent rate. A $2 million verdict against a private contractor does. If your case involves both, the interest exposure isn’t the same across defendants, and you’ll want to know that before you allocate a settlement.
After judgment, interest keeps running. Subdivision 2: “During each calendar year, interest shall accrue on the unpaid balance of the judgment or award from the time that it is entered or made until it is paid, at the annual rate provided in subdivision 1.” For a judgment holder facing a defendant who won’t pay, that’s a real number, and it adds to the practical value of the collection tools discussed in Minnesota’s Garnishment Exemptions. For a rate comparison in private lending, see Minnesota’s Usury Cap Is 8%.
One thing the statute doesn’t say
The comparison in subdivision 1(b) is written in terms of “the amount of its offer” and “the amount of the opposing party’s offer.” The text assumes both sides made written offers. It doesn’t say what happens when one side never made one.
Don’t read that silence as an invitation to guess. This page doesn’t resolve it. It is, though, a strong practical reason to serve a written offer: a party that’s served one is inside the machinery the statute describes, and a party that hasn’t is arguing about a situation the statute doesn’t address.
How I run it
At the outset, on either side of the case:
- Diary the two-year rule. If a written notice of claim went out, the action must be commenced within two years of it for interest to run from that date. The letter date and the two-year date go in the file on day one.
- Treat the demand letter as a dated financial instrument. Send it in writing, keep proof of service, and index it. Under § 549.09 it can move the accrual start date by up to two years.
For a plaintiff:
- Serve a written offer of settlement, and serve it early enough to matter. The comparison rewards accuracy, not aggression.
- Before you lower a demand, price what you’re superseding. The last number is the only one compared.
- Model the case with the future-damages exclusion applied. A verdict that’s mostly future damages generates far less preverdict interest than its headline suggests, and the offer gets allocated in the trier of fact’s own proportion.
For a defendant:
- Understand what an early, credible offer buys. If your offer is closer to the verdict than the plaintiff’s, interest is capped at the lesser of your offer or the judgment and stops on the day you made it.
- Don’t let 30 days run on a written offer without a written counteroffer.
- Check whether your client is a political subdivision. If it is, paragraph (c)(1)(i) governs the rate regardless of the size of the case.
Step back from the mechanics and you can see what the thing really is. Rules that shift costs based on rejected settlement offers usually get called fee-shifting rules, and lawyers size them up that way: a risk of paying the other side’s costs if you turn down a reasonable number. Section 549.09 is a different animal, and a subtler one. It doesn’t shift anybody’s costs. It hands a pot of money that exists either way, the time value of the judgment, to whichever party showed, in writing and on a date certain, that it knew what the case was worth.
That rewards accuracy, not aggression, and it points exactly the opposite way from how most civil cases get negotiated. The party who anchors high and won’t budge isn’t just being difficult. On a large verdict, that party may be handing the other side years of interest at ten percent. The party who never puts a number in writing at all has opted out of the whole thing.
Minnesota built a settlement-forcing device and filed it under “interest on verdicts, awards, and judgments.” Most litigants find it at the end of the case, when all that’s left is checking the arithmetic. I use it at the beginning, where it’s worth something.
Madgett Law, LLC litigates civil claims in Minnesota state and federal court and handles the settlement mechanics that decide what a judgment is actually worth. If you’re evaluating a demand, an offer, or a judgment you’re trying to collect, send us a message or call 612-470-6529.
Sources: Minn. Stat. § 549.09 (interest on verdicts, awards, and judgments) — subd. 1(a) (interest from verdict to entry of judgment); subd. 1(b) (preverdict, preaward, or prereport interest; accrual from commencement, demand for arbitration, or written notice of claim, whichever occurs first; the two-year commencement condition; the 30-day response period; the closer-offer comparison; the cap and cutoff where the losing party’s offer was closer; supersession of earlier offers and counteroffers; allocation of an offer between past and future damages for purposes of clause (2); and exclusions (1)–(5) for workers’ compensation but not third-party actions, future damages, punitive damages, fines, or other noncompensatory damages, judgments not in excess of the amount specified in § 491A.01, and portions founded on interest, costs, disbursements, attorney fees, or similar added items); subd. 1(c)(1)(i) (rate for judgments of $50,000 or less, for or against the state or a political subdivision regardless of amount, and family court actions; secondary market yield of one-year United States Treasury bills; annual determination by the state court administrator on or before December 20 from the one-year constant maturity treasury yield; rounded to the nearest one percent, or four percent, whichever is greater); subd. 1(c)(2) (ten percent per year until paid, for a judgment or award over $50,000 other than one for or against the state or a political subdivision or in a family court action); subd. 1(e) (definitions of “state” and “political subdivision”); subd. 2 (accrual of interest after entry). Minn. Stat. § 491A.01, subd. 3a(a) (conciliation court jurisdiction: $20,000; $4,000 for a consumer credit transaction). Minn. Stat. § 544.36 and Minn. R. Civ. P. 8.01 (the $50,000 pleading threshold). All statutory text from the Minnesota Office of the Revisor of Statutes, 2025 Minnesota Statutes; Minnesota Rules of Civil Procedure as published by the Revisor. Currency check: the Revisor’s Table 2 shows the most recent amendment to § 549.09 as 2021 Regular Session ch. 30, art. 10, s. 78, and no 2025 or 2026 session entries for § 549.09 or § 491A.01.
The annual interest rate applicable to judgments of $50,000 or less is set and published by the Minnesota State Court Administrator under § 549.09, subd. 1(c)(1)(i). This article deliberately does not state a figure for any particular year; consult the State Court Administrator’s published rate for the year at issue.
This article is general legal information about Minnesota law, not legal advice, and reading it does not create an attorney–client relationship. Whether interest is available, at what rate, and from what date depends on the claim, the parties, the offers actually served, and the forum. Do not use this article to compute interest in your own matter. No outcome is promised or implied.